Real Estate Investing For Beginners

Dated: 07/16/2019

Views: 37

Simply stated, when investing in real estate, the goal is to put money to work today and allow it to increase so that you have more money in the future. The profit, or "return," you make on your real estate investments must be enough to cover the risk you take, taxes you pay, and the costs of owning the real estate investment such as utilities, regular maintenance, and insurance.

Real estate investing really can be as conceptually simple as playing monopoly when you understand the basic factors of the investment, economics, and risk. To win, you buy properties, avoid bankruptcy, and generate rent so that you can buy even more properties. However, keep in mind that "simple" doesn't mean "easy." If you make a mistake, consequences can range from minor inconveniences to major disasters. You could even find yourself broke or worse.

The 4 Ways Real Estate Investors Make Money

When you invest in real estate, there are several ways you can make money:

  1. Real Estate Appreciation

    It is when the property increases in value due to a change in the real estate market, the land around your property becoming scarcer or busier like when a major shopping center is built next door or upgrades you put into your real estate investment to make it more attractive to potential buyers or renters. Real estate appreciation is a tricky game. It is riskier than investing for cash flow income.

  2. Cash Flow Income

    This type of real estate investment focuses on buying a real estate property, such as an apartment building, and operating it, so you collect a stream of cash from rent, which is the money a tenant pays you to use your property for a specific amount of time. Cash flow income can be generated from well-run storage units, car washes, apartment buildings, office buildings, rental houses, and more.

  3. Real Estate Related Income

    It is income generated by "specialists" in the real estate industry such as real estate brokers, who make money through commissions from buying and selling a property, or real estate management companies who get to keep a percentage of rents in exchange for running the day-to-day operations of a property. This type of real estate related income is easy to understand. For example, a hotel management company gets to keep 5 percent of a hotel's sales for taking care of the day-to-day operations such as hiring maids, running the front desk, mowing the lawn, and washing the towels.

  4. Ancillary Real Estate Investment Income

    For some real estate investments, this can be a huge source of profit. Ancillary real estate investment income includes things like vending machines in office buildings or laundry facilities in low-rent apartments. In effect, they serve as mini-businesses within a bigger real estate investment, letting you make money from a semi-captive collection of customers.

Latest Blog Posts

Tips For A First Time Seller

Homeowners don't generally think about filling the shoes of a first-time home seller until they decide to buy a new home. Usually, the motivating factor is the need to move -- due to work-related

Read More

Transitioning To Assisted Living What To Do With Your Home

Transitioning your entire life into an assisted living facility is one of the hardest things for anyone to do, both emotionally and physically. There are a number of different things to take

Read More

Home Updates To Make After A Decade

Home Updates To Make After A DecadeHave you lived in your current home for at least 10 years and are starting to wonder what needs replaced or updated? Even if you make maintenance a priority, some

Read More

ORGANIZE YOUR CLOSET LIKE A CHAMP

Do you desire a closet that looks like it’s straight out of a magazine? I have you covered! Follow the tips below to masterfully organize your closet and give yourself peace of mind

Read More